January 4, 2019 - MDT Alert (X)

While the Diary of a Mad Hedge Fund Trader focuses on investment over a one week to the six-month time frame, Mad Day Trader, provided by Bill Davis, will exploit money-making opportunities over a brief ten minute to three-day window. It is ideally suited for day traders, but can also be used by long-term investors to improve market timing for entry and exit points.

The market is getting quite the bid today with the S & P 500 up almost 84 points as I write this.

Today I would like to make a suggestion on a stock we traded a long time ago. That stock is US Steel (X).

After peaking at just over $47 early last year, X pulled back to hit a low of $17 last month.

It is coming up from under the lower band on its daily chart which indicates to me that the risk is quite small at this point.

In addition, X has weekly options which is something I like.

I am going to suggest a weekly covered call.

Buy X at the market which is $20.30 as I write this.

Then Sell to Open (1) January 18th - $21 call for every 100 shares
you buy.

You can sell for $0.50.

These are the calls that expire in two weeks.

If these calls are assigned in two weeks, the return will be 5.9% in two weeks.

Based on the nominal tracking portfolio, I suggest a buy-in of 400 shares or an 8.1% allocation.

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